Acting on the iGaming White Paper – Affordability Checks in the UK Market

Posted by Harry Kane on Friday, May 10, 2024

In the wake of the government’s long-awaited gambling white paper, the UK Gambling Commission (UKGC) has started to implement relevant changes and proposals. Most of these are unsurprisingly aimed at increasingly safety and protecting vulnerable platers, which has long been a core strategic value of the UKGC.

Among these changes is a pilot scheme aimed at implementing ‘frictional’ financial risk assessments, which will include so-called “light touch” checks and more intrusive processes for high stakes or younger gamblers. The aim of this is to prevent instances where customers are able to spend large amounts of cash that they cannot afford to lose in a short period of time. Here’s a summary of these assessments and what should be expected.

The Why – Introducing Vulnerability Checks and Financial Risk Assessments

Financial vulnerability checks were a key component of the gambling white paper, amid concerns surrounding problem gambling and the amounts spent by high-rollers and VIPs. This represents the next frontier in responsible gambling, as financial checks are carried out to ensure that players are wagering at a level that they can afford to lose.

The white paper highlighted various instances where players have been permitted to wager outside of their financial means. In one case, a high roller at an online casino was allowed to wager at a rate that failed to take account of their previous bankruptcy. In another, an operator’s lack of safeguards enabled a customer to spend £245,000 in just three months online, despite the firm knowing that she was an NHS nurse earning £30,000-per-annum.

Incredibly, another customer was also empowered to lose £70,000 over a period of just 10 hours during a single day. This came after they had immediately opened their account online. One customer was also given a £1,300 monthly deposit cap, despite only earning £1,400 a month.

Analysis of these and similar circumstances has compelled the government to propose affordability and financial vulnerability checks. These would help operators to identify instances in which players are wagering outside of their means, while also creating a process through which they could assess circumstances and impose fair deposit limits.

How Will These Financial Checks Work?

The ‘pilot’ scheme will promote a two-tiered approach and ‘frictionless’ financial risk assessments. The need for frictionless checks is pressing and was laid out in detail as part of the government’s comprehensive white paper, as operators will have to commit to safe data sharing and comply with a strict process for gathering, managing and utilising data.

More specifically, operators will have to rely on publicly available data. Following a public consultation and detailed feedback, it has also been agreed that operators will not be able to consider an individual’s personal details such as their job title or postcode. The threshold for these light touch financial checks will also be set when customers make a net deposit in excess of £150 a month.

The checks will be phased in by operators too. Initially, customers with a net monthly deposit of £500 will be subjected to light touch financial checks from August 30th, 2024. This will subsequently reduce to £150 a month from February 28th, 2025, allowing breathing space for both players and operators alike.

The Commission will also commit to working closely with credit reference agencies and licensed gambling entities. This will aid public data collection and analysis, establishing the exact financial thresholds at which assessments will be carried out going forwards. This creates scope for individual financial vulnerability checks on players depending on their precise circumstances.

Importantly, the assessments will not be rolled out in a live environment, at least for the duration of the pilot scheme. This will determine its viability and whether frictionless checks are viable in the marketplace. Similarly, neither the light touch checks nor financial risk assessment pilot will have an adverse impact on consumer credit ratings.

The Last Word – What Will These Changes Mean for Players and Operators?

Ultimately, there’s a solid argument and arguably a need for some kind of financial vulnerability check in the modern iGaming and remote betting industry. Even though some have argued that the extent or scale of problem gambling has been exaggerated in the UK, it’s more prevalent among high rollers and the issues posed by gambling-related harm cannot be ignored.

By proposing financial risk assessments, the UKGC and government are able to determine the context surrounding the highest paying online casino accounts. They can then analyse the risk of harm and take steps to prevent this, by setting viable deposit and spend limits that are within a customer’s financial means.

While this may help to protect players, however, it may also inconvenience those who aren’t vulnerable to problem gambling. This may encourage some to wager on the burgeoning black market, putting them at further risk of loss and fraudulent activity over time. As for operators, they’ll have to factor in the cost and time implications of imposing financial checks, while dealing with a reduction in turnover in instances where monthly deposits diminish.

Each of these considerations will be thought about and monitored in real-time during the pilot scheme. This scrutiny will also be applied during the two-staged roll out, to ensure that frictionless financial vulnerability checks are both viable and effective. From here, we’ll know much more about such checks and how they’re likely to be implements on a mass scale, while understanding precisely how this would impact everyone in the marketplace.

This will definitely be an interesting space to watch in the future, and one that will have a significant bearing on how the iGaming and remote betting market evolves in the coming years.